What a tenant should look for in a commercial lease

On Behalf of | Jul 6, 2022 | Real Estate & Development

You have probably encountered a lease agreement, perhaps for a home or apartment that you rented. But this experience does not prepare you for the issues that commercial leases must address.

There are many different clauses that you can expect to find when evaluating a commercial lease. Here are five of the most common clauses that you should look for.

1. Lease period

Commercial leases often have extremely long terms, even up to 100 years. A long lease may be to your benefit, as it offers rent control and assurance of maintaining your address. However, if you expect your business to outgrow your space you may prefer shorter terms.

2. Use restrictions

Commercial leases often impose restrictions on how you can use the property. In addition to prohibiting illegal activity, common lease provisions limit the type of business you can operate, enforce non-compete agreements, limit the size of signs, etc.

3. Insurance requirements

What insurance does the landlord require, and who will pay for it? Can you obtain your own insurance or must you pay for insurance your landlord arranges?

4. Common areas

Understand what common areas you can access and who will maintain them. This includes walkways, parking lots and driveways.

5. Maintenance and repairs

Misunderstanding this clause can cost you quite a bit of money. Be very sure you understand who will maintain and provide repairs for the building, HVAC, permanent fixtures and appliances, etc.

These are only a few of the many clauses and issues that you can expect to find in a commercial lease. Understanding each clause thoroughly before signing is mandatory for protecting your business.